The entrepreneurs in India, especially the women or the people belonging to SC/ST community, mostly face challenges while obtaining a business loan to start their venture.
In a noble effort by the government to help the women and SC/ST entrepreneurs in India, a Stand-Up India scheme was launched in April 2016.
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Stand Up India Scheme Objective
The main objective of Stand-Up India is to provide financial assistance in terms of a bank loan to the small business owners, ranging from Rs. 10 lakhs to Rs. 1 crore to at least one women entrepreneur borrower and SC/ST entrepreneur from every bank branch. Notably, the loans are offered to set up a Greenfield enterprise which may operate in trading, manufacturing, or services sector.
Notably, if the enterprise is a group company, then a minimum of 51% of the controlling and stake must be held by the women entrepreneur or an individual belonging to the SC/ST community. The Stand-Up India loan is available at all scheduled commercial bank branches.
The loan scheme can be termed as the lowest interest rate offered by the bank to any particular category. However, the rate of interest must not exceed the Tenor Premium + MCLR + 3%.
A borrower can get a business loan ranging from Rs. 10 lakhs and Rs. 1 crore. Here, the composite loan will cover 75% of the project’s cost, which includes the term loan and working capital loan. The condition here is that the loan of 75% of the project will not be applicable if the borrower contributes more than 25% of the overall project from his savings or any other financial support.
There is a need to offer primary security by the borrower. Besides, the business owner may also require to provide security or a guarantee of the Credit Guarantee Fund Scheme for Stand-Up India Loans, as requested by a bank.
The maximum tenure for the repayment of the loan is seven years and the moratorium period is 18 months.
Availability of Loan Scheme
A business owner can get access to the loan scheme by all scheduled commercial banks by directly visiting their bank branch or by visiting the Stand-Up India website.
The business loan is offered to a woman or SC/ST entrepreneur who is starting his business venture for the first time in trading, manufacturing, service sector.
If the loan is approved for a limit of Rs. 10 lakh, the loan amount is sanctioned in the form of overdraft. The borrower is provided with a RuPay debit card for his convenience of withdrawing money quickly as and when required. If the business loan is availed for more than Rs. 10 lakh, the borrower is provided with the same by the cash credit limit.
The borrower is expected to contribute at least 10% of the cost of the project from his own funds or savings.
Stand-Up India Scheme Eligibility
To take the benefits of Stand-Up India, the business owner needs to be eligible for it by complying with the following eligibility criteria:
The business owner must be at least 18 years old.
The business owner must either be a woman or belong to SC/ST community.
The loans under the Stand-Up India scheme are only offered for Greenfield projects. The business venture must be the first one undertaken by the business owner.
If a group of individuals is starting the business, then at least 51% of the controlling and shareholding must be taken by a woman or SC/ST entrepreneur.
The business owner should not have defaulted on any loan.
Requirements for Stand-Up India Loan
The following are a few factors that directly and indirectly influence the approval/disapproval of the business loans under the loan scheme:
The business owner’s location of residence place
The category that they belong to – woman, SC, or ST
Availability of the planned business premises
The amount invested by the borrower
Business owner’s prior experience in handling a business
The borrower can conveniently apply for the business loan by registering on the portal quickly from home or office. The typical questions that the borrowers have to answer while filling the application form include:
Category, whether woman, SC, or ST
Availability of the business place
Details of bank account
Amount of investment by self in the business project
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